Kalamazoo County saw steep drop in property values from 2007-12 but rate of decline has slowed

KALAMAZOO, MI -- Property values in every city and township in Kalamazoo County dropped from 2007 to 2012, with the county as a whole seeing a loss of more than 12 percent.

Every governmental entity in Kalamazoo County saw a decline in the market value of property from 2007-12, according to a report by Bridge Magazine. The city of Kalamazoo saw the biggest loss – values dropped 22.7 percent, from about $3.45 billion to $2.66 billion. Richland Township saw the smallest drop, at 0.80 percent, from about $754 million to $749 million.

Overall in Michigan, the analysis shows values decreased more than $260 billion over the five-year period.

"Values dropped from $725.5 billion in 2011 to $698.6 billion in 2012," reported Ted Roelofs, a writer for Bridge Magazine, an online publication of The Center for Michigan. "Adjusted for inflation, that amounts to a drop of nearly $36 billion in value for residential, industrial, commercial, timber, development and personal property.

The rate of decline, however, slowed in the last year, which is reflected in Kalamazoo County's numbers as well. Values dropped 12.1 percent from 2007-12, but by just 4.6 percent from 2011-12 in the county. Pavillion Township even saw a 1 percent gain in real market value in 2012 from a year earlier, according to the analysis.

Dropping property values mean dropping revenues for local governments, which derive large chunks of their budgets from property taxes.

Kalamazoo County Administrator Peter Battani said the county government has absorbed its losses largely through significant reductions in health care and longevity pay, as well as other benefits, for employees.

The Kalamazoo
County Board of Commissioners in the coming weeks will again review
retiree health care and compensation. Battani said officials are trying to avoid furlough days or layoffs.

"Furlough days and loss of
head count means less services for the general public,” he said.
“We try to minimize the impact on the general public as much as
possible. It has come at the expense of the employees."

In Portage, which saw an 11.1 percent drop in the market values of its property during the five-year period from 2007-12, Mayor Pete Strazdas said officials took a proactive approach to minimize effects on the city's bottom line.

"Fortunately
for Portage, we kind of had senses that this wonderful ride up to the
top of the rollercoaster could only go so high with the economy,"
Strazdas said. "We made strategic moves over the years."

Those
moves included outsourcing the city’s public works and information
technology departments and shifting to a defined contribution program
for city employees’ retirement costs.

"We were cutting back before
we were forced to cut a lot, and those were painful things to do ... but today we are all thankful that we made some of those cuts years
ago," Strazdas said.

Declining property values are only one part of the difficulties
municipalities face, according to the Portage mayor. State revenue sharing has
decreased significantly and changes in Michigan's personal property tax law will have an impact, too, he said.

Strazdas and Battani both point to the impact of dropping property values on cities, which have generally showed steeper declines than suburban and rural areas.

"That is a very serious and significant concern for all of us, regardless of whether or not we live in the city or don't," Battani said. "We’re all interconnected in terms of population and service and where we live. We may live in Texas Township and growth may be good out there, but if property tax is headed in the opposite direction in Kalamazoo, that is not good for the region."

While its 22.7 percent drop in real property value over five years was the steepest in Kalamazoo County, according to the Bridge Magazine report, that rate slowed to 10.4 percent from 2011 to 2012.

"My observation is that we're doing better than most (check Detroit metro, Pontiac and Flint with losses of 35-60 percent) and not as good as a few (Ottawa and Kent counties with losses of 10 to 15 percent)," Kalamazoo City Manager Kenneth Collard said in an email. "And the Kalamazoo Promise combined with the efforts of Southwest Michigan First have probably 'saved' us from additional losses."

Kalamazoo Township saw the largest loss of value, at 21 percent, of any township in Kalamazoo County from 2007-12, according to the Bridge analysis.

"It has put a serious crimp on our budgeting and therefore the services we’re providing," said Ron Reid, township supervisor. "We've been working really hard to continue the same level of services that we've had in the past and it’s been a challenge.

"I think we've held up to that challenge and we’ve got some really fantastic people that are working very hard to do a very good job, but the concern that I have is that these people really cannot continue at this high level of service indefinitely. There comes a point that we need to provide them some relief."

Kalamazoo Township recently replaced two full-time positions that became vacant with one part-time employee, Reid noted, and last year the township board reduced elected officials’ salaries and benefits. The township has delayed maintenance to buildings and parks, and taken other steps to reduce costs, such as removing dilapidated tennis courts in Edna Park in the Eastwood neighborhood instead of replacing them. "It’s turned back into an open space area,” Reid said.

In Ross Township, in the relatively affluent Richland area, property values fell off 16.7 percent from 2007-12, according to the Bridge Magazine analysis.